Tuesday, December 29, 2009

This was a book that my Dad gave me for my birthday a couple of months back, along with several others, and it had sat somewhere towards the bottom of the big teetering pile of books-in-progress on my bedside table, which is a constantly churning, occasionally-overflowing-onto-the-floor, index of whatever I'm currently interested in. Somehow this book hadn't really caught my attention (I guess the cover-art didn't really work on me), but mainly out of a sense of duty to my Dad I threw it into my bag for this trip.

And Wow! This is one of the best books I've read in a long time. It's gripping, it's tears-down-the-cheeks heartwarming, it's inspiring, and it's must-read material for anyone who cares deeply about the shape of the ongoing collision between global civilization and global resource constraints.

Sunday, December 27, 2009

I'm still on Christmas vacation, but have been reading dirt: The Erosion of Civilizations by David Montgomery as my idea of cheery relaxation reading. I wanted to offer a few comments as a mini-review (meaning I want to give my impressions without being held to any particular standard - I am still on vacation after all!)

Firstly, to state my prejudices on this issue - soil erosion is an issue that I've found difficult to form a clear opinion on (you can read as far as I'd gotten in the "Soil Loss" section of this Oil Drum piece. It's clearly important in the long term, it doesn't seem to be an acute crisis globally (though it's certainly serious in some places), and it's not easy to sort out the science and decide exactly how acute a problem it is. Conventional agriculture clearly discounts the problem and is focussed on short term profit over long-term health of the soil. On the other hand, there is clearly an over-alarmist wing of the environmental movement (epitomized by people like Lester Brown) that is prone to overstating the severity and immediacy of the issue. In between these extremes, I haven't really been able to figure out the situation to my satisfaction.

Monday, December 21, 2009

“No, absolutely not,” al-Naimi said today as reporters asked if the Organization of Petroleum Exporting Countries will adjust the output limits that have been in place all this year. Asked if he was happy with oil prices, he said, “Yes, absolutely.” Al-Naimi predicted “gradual, steady growth” in the economy next year.

OPEC has a consensus to extend the current production limit of 24.845 million barrels a day, Secretary General Abdalla Salem el-Badri told reporters earlier today. Oil has gained 66 percent since the beginning of 2009, when production cuts agreed late last year took effect. The group left quotas unchanged for a third time when it last met in September.

Friday, December 18, 2009

Thursday, December 17, 2009

Ok, let's go about this differently - looking at correlations with employment (as yesterday and the day before) is not getting me anywhere. Let's do something simpler. In a non-oil-shock but post-financial-crisis world, what is a reasonable range of estimates for the growth in OECD oil consumption during a recovery?

To estimate this, we need to estimate two things - what will the growth of GDP be? And how will oil efficiency evolve - the ratio of GDP to oil consumption?

Monday, December 14, 2009

Professor Jim Hamilton has an interesting post up about whether the Federal Reserve should try to put a stop to bubbles:

Before we can discuss this issue, we'd need to agree on what we mean by a "bubble". Here's one definition that a lot of people may have in mind: a bubble describes a condition where the price of a particular asset is higher than it should be based on fundamentals and will eventually come crashing back down.

If that's what you believe, then there's a potential profit opportunity from selling the asset short whenever you're sure there's a bubble. And if that's the case, my question for you would be, why don't you do put your money where your mouth is instead of telling the Fed to do it for you? Your answer might be that it could take years for the bubble to pop, and you're not willing to absorb the risk in the interim. Or maybe you don't have the capital to cover the necessary margin requirements while you're shorting the bubble on the way up.

Even so, posing the statement in this way should bring a dash of humility to those currently claiming to see a plethora of bubbles that the Fed supposedly needs to fight. What exactly persuades them that they are right and all the other players in the market are wrong? How much of their personal wealth are they staking on the strength of their convictions? And even if you're absolutely sure you know how to identify bubbles, raising interest rates as a response is, as Tim Duy observes, "a rather blunt weapon that kills indiscriminately".

Wednesday, December 9, 2009

This one is even better, showing the growth of Baltimore (done by NASA). If you imagine all that orange space filled up with cars rushing about, using oil, it's sort of intuitive that the bigger it is, the more oil it takes to power it.

Tuesday, December 8, 2009

This morning, I want to briefly lay out what the issues are that I want to work on via this blog. Obviously, surprises might turn up, but certain things I can see clearly are going to need to get covered, and I'd like to try and summarize that agenda.

What I think is going to happen in the world is roughly as follows: currently, and for another year or N, OPEC has some spare capacity, and will most likely act to moderate prices somewhat - they will go roughly sideways for a while (give or take a few $10s/barrel). However, as the global economy slowly recovers from the 2008-2009 recession, eventually that spare capacity is going to get eroded, and we are going to get a second price spike, probably bigger than the one in 2008, and big enough to get everyone to really take the oil supply situation seriously and put us on the kind of efficiency trajectory that is actually needed. That second shock will also trigger another recession.

Monday, December 7, 2009

Year over year improvement in fuel economy of new light vehicles, left scale, together with oil price pain index, right scale. See text for details. Source: EPA for fuel economy statistics, BP for oil prices, with estimate for 2009 based on data through November, BEA for GDP.

Friday, December 4, 2009

Fuel economy of new light vehicles, together with average annual oil price (expressed in $2008). Source: EPA for fuel economy statistics, BP for oil prices, with estimate for 2009 based on data through November

Thursday, December 3, 2009

Phew! I was actually getting a little worried there writing those posts about oil supply. But I guess I shouldn't have bothered my fluffy little head, because CNN is here to reassure me that everything is going to be just fine. Peachy. Future's so bright, we've gotta wear shades. Here is the official word from the most trusted brand in cable television:

Because oil prices have always been directly related to the strength of the economy, a recovery might have seen headlines like these:

• The recession ends: Get ready for $100 oil

• The economy roars: $140 oil, is there an end in sight?

• Everyone in China buys a Cadillac: World tapped out

But a growing number of experts are saying that you can forget all that. For the next couple of years, they say, oil prices will remain well below $100 a barrel as the economy remains fragile and efficiency measures kick in.

Wednesday, December 2, 2009

A few surprises here. Bangladesh would not usually be thought of as best positioned to do well in an era of oil scarcity! And look at the famously dense and bike-friendly Netherlands down there below the United States. Perhaps no surprise that the bottom of the rankings are dominated by oil exporting nations.

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About Me

I'm a scientist and innovator in the technology industry, with a broad range of interests and experiences. I have a Physics PhD, MS in CS, and have done research, lived in cohousing communities, run a business, and designed technology products. Professionally, I have mainly worked on computer security problems. Currently I'm Adjunct Professor of Computer Science at Cornell, but this blog represents my views only.
Email me at stuart -- at -- earlywarn -- dot -- org. I do read all email, but because the blog is a part-time unfunded enterprise, I often fail to reply due to lack of time - apologies.